On 21 March 2020, the Luxembourg Parliament passed a law to transpose the so-called "DAC 6" (EU Directive 2018/822 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements) into Luxembourg domestic law (the "Law") (first constitutional vote). A request to dispense with the second vote has been filed with the State Council.
DAC 6 requires EU "intermediaries" (or taxpayers) to report cross-border arrangements that strongly present a risk of tax avoidance or abuse.
The Law follows the text of DAC 6 closely when it comes to DAC 6's main concepts such as cross-border arrangements, intermediaries, associated enterprises, information to report, etc.. The Law provides for a few Luxembourg-specific elements where DAC 6 specifically leaves Member States discretion as to how to implement it.
In particular, Luxembourg opted to give lawyers, auditors and accountants – all covered by professional secrecy under the law of Luxembourg - the right to a waiver from filing information on a reportable cross-border arrangement. The exempted intermediary is however required to notify any other intermediaries of its reporting obligations. Failing such other intermediaries, he must notify the taxpayer and as the case maybe, provide him with all information that must be reported.
Luxembourg decided that any failure to meet the obligations under the Law could lead to fines of up to EUR 250 000. The amount of any one fine will be determined on a case-by-case basis.
The Law will enter into force on 1 July 2020. The reporting should start as soon as 1 July 2020 (and by 31 August 2020 at the latest) for reportable cross-border arrangements whose first implementation step occurs between 25 June 2018 and 1 July 2020.
For reportable cross-border arrangements whose triggering events occur after 1 July 2020, the reporting shall be made within 30 days.
For more information on DAC 6, please refer to our Newsletter of 13 August 2019.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.